RBI permits CVC to probe corruption cases in private sector banks

In 2016, Supreme Court had ruled that the chairman, managing directors and other officers of a private bank could be seen as public servants when it came to the Prevention of Corruption (PC) Act, 1988. Photo: Aniruddha Chowdhury/Mint

New Delhi: The Central Vigilance Commission (CVC) can now probe allegations of corruption in private sector banks and against their employees. Vigilance Commissioner T M Bhasin told PTI the Reserve Bank of India (RBI) has given the necessary approval to the CVC on this.

The move comes after the Supreme Court last year ruled that the chairman, managing directors and other officers of a private bank could be seen as public servants when it came to the Prevention of Corruption (PC) Act, 1988. The anti-corruption watchdog is the statutory body which probes cases of graft involving central government departments, public sector organisations (including banks and insurance companies) and their employees.

“The CVC can now also look into cases of corruption involving private sector banks and their managements like CMDs and MDs,” Bhasin said. He said the RBI and the Department of Financial Services had recently approved the provisions in this regard. “The necessary mechanism has been put in place and cases of corruption in the private sector banks are now being looked into,” Bhasin said.

The apex court had said all officials working in banks operating under an RBI licence would be defined as public servants under the PC Act. It had said bank employees, private or public, were on public duty and therefore came under the law. The Supreme Court had also referred to Section 46A of the Banking Regulation Act and said that such bank officials were considered public officials.

The CVC has also started sharing cases of criminal conspiracy and corruption with agencies such as the Central Bureau of Investigation (CBI) for probes. PTI